United Airlines last about $7 billion last year.
Daniel Slim/AFP via Getty Images
United Airlines surprised investors with news that it expects to make money next month for the first time since before the pandemic decimated demand for air travel. It is another bit of evidence that the commercial aerospace industry is pulling out of its depression.
Monday’s announcement comes before the airline hosts an event for analysts and investors on Tuesday. United Airlines (ticker: UAL) “expects to generate positive adjusted pretax income in the month of July 2021, which would be the first month with positive adjusted pretax income since January 2020,” reads part of the short news release. “This expected performance would mark an important financial milestone.”
United lost roughly $7 billion in 2020 after earning $3 billion in 2019. For 2021, Wall Street projects a $3.4 billion loss before full-year profits return in 2022.
The stock wasn’t doing much in premarket trading. Shares were down about 0.5% at $53.63, while futures on the S&P 500 and Dow Jones Industrial Average were near the break-even line.
Some good news is already reflected in United stock. Shares have risen about 25% in 2021 and are up about 84% from their 52-week low set in July 2020.
Back then, July commercial air traffic at U.S. airports was down more than 70% year over year. Less than 21 million people boarded planes, while in July 2019, that number was almost 80 million.
So far in June 2021, about 51 million people have boarded U.S. flights. That is still down about 27% compared with June 2019, but up almost 300% from June 2020.
Looking ahead to United’s investor event, Cowen analyst Helane Becker is looking for three things. She believes the airline will introduce three-year earnings targets, that it might order new aircraft, and that United might introduce a United-branded aircraft. “The company has invested in two new tech aircraft so far: Archer’s eVTOL and Boom Overture’s supersonic jet,” wrote Becker in a Friday report.
eVTOL is short for electric vertical take off and landing. It might be used as an air taxi.
Becker rates United stock Buy and has a target of $65 for the price. She is a little more bullish than her peers. Overall, about 45% of analysts covering the stock rate shares at Buy, while the average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $62 a share.
Write to Al Root at [email protected]
